Central banks forecast more gold purchases, fewer US dollar reserves in years ahead
Central banks around the world are snapping up gold (GC=F) at a record pace while forecasting a pullback in US dollar reserves in the years ahead.
According to a survey from the World Gold Council, 95% of central bank respondents expect global gold reserves to rise over the next 12 months. A record 43% said they plan to increase their own holdings during that time.
At the same time, 73% of central banks anticipate a moderate or significant decline in US dollar holdings within global reserves over the next five years. Respondents expect the share of other currencies, such as the euro and renminbi, will also increase over the same five-year period.
A decline in the US dollar index (DX-Y.NYB) of 9% year to date has raised concerns over its dominance amid geopolitical tensions and a trade war. Weariness over America's fiscal trajectory has also driven demand for assets such as currencies in Europe and Asia amid expectations of foreign stimulus and more attractive valuations abroad.
Gold prices have repeatedly hit all-time highs this year, fueled by central bank purchases, inflows into exchange-traded funds, and expectations that the Federal Reserve will cut interest rates.
Central bank gold buying has been steadily accelerating, adding more than 1,000 tonnes to their reserves annually over the past three years — more than double the 400–500 tonne average seen in the previous decade.
While many Wall Street analysts remain bullish on gold heading into the end of the year, Citi said it expects gold demand to abate as a Trump "put" kicks in ahead of the 2026 elections.
"We strongly believe that President Trump cares about US popularity, GDP, and geopolitical success, and thus the Trump put exists," wrote the analysts on Monday, noting that "he may dial back his policies or use innovative new ideas" to raise growth.
"Our work suggests that gold returns to about $2,500 to $2,700 an ounce by the second half of 2026,' the analysts said.
Year to date, gold is up roughly 27%.
Ines Ferre is a Senior Business Reporter for Yahoo Finance. Follow her on X at @ines_ferre.
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